Ethics: Using Outside Legal Contractors

Be careful when considering the use of an outside service to assist in the representation of a client. The Rules of Professional Conduct still apply, and lawyers must take special care to get the client’s informed consent, vet possible conflicts of interest, maintain client confidences, and supervise the service provider, among other obligations.

Question

Our law firm is considering the use of outside contractors to do some work for our clients, such as document review and document preparation. Are we allowed to do that?

Answer

The Rules of Professional Conduct do not prohibit a law firm from outsourcing different legal or nonlegal support services to entities outside the law firm, but the law firm must exercise a great deal of caution if it does so. The lawyer and law firm owe several duties to their clients, including the duty of confidentiality, the duty of competence, and the duty of charging only reasonable fees for services being provided to clients. There are many issues to consider before outsourcing legal or nonlegal work to a third-party entity.

Obtain Client Consent. The foremost obligation is to obtain client consent before using a nonfirm entity to provide legal or nonlegal services relating to the representation. SCR 20:1.4(a) requires that the lawyer “disclose and consult with a client concerning the objectives of the representation” and “consult with the client as to the means by which they are to be pursued.” This requirement also is found in SCR 20:1.2(a). Thus, the lawyer or law firm must get informed consent from a client before using an outside entity to perform services that directly relate to representation of the client.

Maintain Client Confidentiality. A lawyer or firm also must study the rules regarding confidentiality when considering using an outside source for services relating to representation of clients. SCR:1.6(a) makes it clear that all information acquired during the course of a representation is considered confidential and may not be disclosed to others, unless the disclosure is impliedly authorized as part of the representation or informed consent is obtained from the client for the release of that information. Lawyers should obtain informed consent from the client before using an outside contractor to perform services as part of the representation. Ethics opinions have suggested that the use of outside sources is not impliedly authorized as part of the representation and, therefore, the law firm must get the client’s informed consent in advance before using nonfirm services as part of the representation and disclosing confidential information to the outside entity.

Dean R. Dietrich, Marquette 1977, of Ruder Ware, Wausau, is chair of the State Bar Professional Ethics Committee.

Analyze Conflicts of Interest. The use of an outside agency or service also requires analysis of the conflict-of-interest rules. Under SCR 20:1.7 and 20:1.9, a lawyer cannot use outside services that might have been used by opposing counsel in the representation. This requires the lawyer to review information about the outside provider and consider the potential for a conflict of interest based on services provided to another party involved in the proceedings.

Supervise the Services Provided. The Rules of Professional Conduct also place certain obligations on a lawyer to supervise the services provided by staff members and nonfirm individuals. SCR 20:5.1(c) and 20:5.3(a) and (c) make a lawyer responsible for another person’s violation of the Rules of Professional Conduct if the lawyer ordered the conduct, or with specific knowledge of the conduct, acted to ratify the steps taken by an outside source. The rules address the type of oversight that is necessary, including due diligence as to the qualifications and reputation of the individuals who would be providing the outsourced services.

Charge Only Reasonable, Nonduplicative Fees. The fees charged by the lawyer must, of course, be reasonable under SCR 20:1.5. Thus, the lawyer must be careful to ensure that the use of outside providers does not result in the client being charged an unreasonable or duplicate fee for services rendered.

Maintain Appropriate Attorney-Client Relationship. When lawyers use third parties to provide services related to representation of clients, they must continue to maintain an appropriate attorney-client relationship and are continually obligated to provide competent and ethical representation. To do that, lawyers should make sure they have satisfied their obligations to their clients, including:

providing competent work and supervision of individuals providing services;

making adequate disclosure and obtaining informed consent from the client for use of the outside services; and

avoiding the unauthorized practice of law (for example, assisting a nonlawyer to provide legal services).

The lawyer must be very careful when considering the use of an outside service to assist in representation of clients, which requires full disclosure to clients to obtain informed consent to use such services.